A number of Egypt’s industrial regions have suffered from a decrease in production as a result of the country’s continued economic crisis. A recent report conducted by the Investors Union stated that approximately 1500 factories in Egypt have either closed or are operating at reduced capacity.

With the worsening of Egypt’s economic crisis and the continued depreciation of the value of the pound, the number of closed factories is expected to increase. This is especially true for factories importing raw materials to be used in local production, due to the high cost of these materials and a drop in demand in the Egyptian market.

Mohamed al-Murshedi, vice president of the Federation of Investors and president of the Textile Industry Division, said nearly 40% of Egyptian yarn and textile factories have shut since the beginning of the January 25th Revolution. He attributed this to the weakness of successive governments since then to crack down on smuggling, a phenomenon which has hurt local production and made it hard for Egyptian products to compete on the world market, which in turn has made it hard for local factories to secure credit from banks. These problems have persisted with the lack of any clear political policy to help guide and restrain the market, in addition to instituting a system of fair competition among local producers.

Osama al-Tabei, a member of the Board of Directors for the Federation of Investors and president of the Investors Organisation of New Domietta, said a total of 28 small and mid-sized factories had been shut down in the Domietta region, primarily in the furniture and building/printing materials sectors. He attributed this to the difficulty faced by many factories to service their debt and the general failure of others to persevere in the face of Egypt’s continued economic crisis.

He added that a number of these factories had brought their grievances to the Industry Modernisation Authority, which had so far worked to help address the resource deficiencies of just four of the region’s 28 factories. The Central Bank of Egypt called on other banks operating in the local market to priorities funding to closed factories.

Magdi Abd el-Moniem, pesident of the Investors Organisation for the 6th of October Industrial Region, said over 100 factories operating in the engineering, chemical and food sectors had been shut down. He added that the organisation had successfully helped negotiate an end to a number of ongoing disputes between several of the region’s factories and the National Bank of Egypt (NBE), allowing six to resume operations. However this was still a small amount compared to the number of factories that remained either shut down or closed, he said.

Abu al-Alaa E al-Naga, secretary general of the Federation of Investors and vice president of the Investors Organisation for the 10th of Ramadan City, said over 200 factories in the region had shut down or were operating at reduced capacity. He added that a number of these factories had closed because of their inability to make repayments.

He said the government’s “continued negligence” would result in economic catastrophe that would lead to decreased production and layoffs. He added that it was necessary for all parties involved to outline a clear plan governing the role of banks, investors and government to resolve the crisis.

Alaa al-Saqti, president of the Investors Organisation in Badr City, said 50 factories in the area had been threatened with bankruptcy or foreclosure in the absence of any consistent government or banking aid.

Mohamed al-Qalyubi, president of the Investors Organisation of Mahala, said nearly 40 factories in the region had been shut down or were operating at reduced capacity. This he said, included a number of large factories such as Abu al-Sabaa and Fajar Al-Mahala. He said this would have a negative impact on the production of yarn and textiles, and that a ministry should be created to address this issue.

Fatahi al-Sayyed, president of the Investors Organisation of Buhaira, said nearly 100 small and mid-level factories had been shut down due to their inability to obtain adequate resources. These included textile, food and printing resource factories.

Leaders of the Upper Egypt Organisation of Investors warned that a number of factories in the region may shut down due to their inability to obtain fuel and natural resources.

Muhammad al-Shandawili, president of the Investors Organisation of Suhaj, said the region’s factories were under-capitalised. He added that 26 factories in the region had closed and that many faced foreclosure.

He said Upper Egypt needed an incentive package to help spur development and complete construction of the region’s industrial facilities. This would include the distribution of financial allocations from the Maintenance of New Industrial Regions Fund, an organisation within the Industrial Development Authority. This would help fund new infrastructure projects, attract investment, and lower the cost of constructing, repairing and maintaining industrial facilities.